Income Tax Filing and Tax Liability for Receiving Funds through Bank Account

[shrimantasarkar30]

I operate a recharge service, where I add funds to my Amazon Pay balance using my Punjab National Bank (PUNB) savings account (Jan Dhan Yojana). I earn a 3% commission on recharges. Customers transfer funds to my PUNB account via UPI.

My monthly receipt from customers is approximately ₹60,000 (₹2,000 x 30), and my annual receipt is around ₹7.2 lakh (₹60,000 x 12).

I would like to know:

1. Do I need to file income tax returns for receiving these funds?
2. What tax liabilities do I have, if any?
3. Are there any specific tax compliance requirements I need to fulfill?

Please advise me on the necessary steps to ensure I am tax-compliant.

 

[TaxWiser]

I operate a recharge service, where I add funds to my Amazon Pay balance using my Punjab National Bank (PUNB) savings account (Jan Dhan Yojana). I earn a 3% commission on recharges. Customers transfer funds to my PUNB account via UPI.

My monthly receipt from customers is approximately ₹60,000 (₹2,000 x 30), and my annual receipt is around ₹7.2 lakh (₹60,000 x 12).

I would like to know:

1. Do I need to file income tax returns for receiving these funds?
2. What tax liabilities do I have, if any?
3. Are there any specific tax compliance requirements I need to fulfill?

Please advise me on the necessary steps to ensure I am tax-compliant.

Hey there!

It sounds like you're doing a great job with your recharge service! Here are a few friendly tips to help you stay on top of your tax game:

1. Filing Income Tax Returns

Yes, you should definitely file your income tax returns. Since your annual receipt is around ₹7.2 lakh, it's above the basic exemption limit of ₹2.5 lakh. So, filing an ITR is a must.​

2. Tax Liabilities

Your income from the recharge service counts as business income. Here’s what you need to know:​

• Income Tax: You’ll be taxed on your net income (total receipts minus expenses). The tax rates depend on your total income.
• Presumptive Taxation Scheme: If your turnover is less than ₹2 crore, you can opt for this scheme under Section 44AD. It’s pretty straightforward – 8% of your gross receipts (or 6% if through digital transactions) is considered your income, and you’re taxed on that.

3. Tax Compliance Requirements

• GST Registration: You need to register for GST if your annual turnover exceeds ₹20 lakh. Since you’re at ₹7.2 lakh, you’re good for now.
• Maintain Records: Keep track of all your transactions, including customer receipts and expenses.
• Advance Tax: If your tax liability is more than ₹10,000 in a year, you’ll need to pay advance tax in installments (June, September, December, and March).

■ Steps to Ensure Tax Compliance

1. File ITR: Make sure you file your income tax return on time. The due date is usually July 31st.
2. Maintain Books of Accounts: Keep accurate records of all your income and expenses.
3. Consult a Tax Professional: It’s a good idea to talk to a tax pro to make sure you’re getting all the deductions you can and staying compliant.

By following these steps, you’ll be on the right track and avoid any tax-related headaches.

Cheers!

(Source: Conversation with Gemini AI)

 

[shrimantasarkar30]

Hey there!

It sounds like you're doing a great job with your recharge service! Here are a few friendly tips to help you stay on top of your tax game:

1. Filing Income Tax Returns

Yes, you should definitely file your income tax returns. Since your annual receipt is around ₹7.2 lakh, it's above the basic exemption limit of ₹2.5 lakh. So, filing an ITR is a must.​

2. Tax Liabilities

Your income from the recharge service counts as business income. Here’s what you need to know:​

• Income Tax: You’ll be taxed on your net income (total receipts minus expenses). The tax rates depend on your total income.
• Presumptive Taxation Scheme: If your turnover is less than ₹2 crore, you can opt for this scheme under Section 44AD. It’s pretty straightforward – 8% of your gross receipts (or 6% if through digital transactions) is considered your income, and you’re taxed on that.

3. Tax Compliance Requirements

• GST Registration: You need to register for GST if your annual turnover exceeds ₹20 lakh. Since you’re at ₹7.2 lakh, you’re good for now.
• Maintain Records: Keep track of all your transactions, including customer receipts and expenses.
• Advance Tax: If your tax liability is more than ₹10,000 in a year, you’ll need to pay advance tax in installments (June, September, December, and March).

■ Steps to Ensure Tax Compliance

1. File ITR: Make sure you file your income tax return on time. The due date is usually July 31st.
2. Maintain Books of Accounts: Keep accurate records of all your income and expenses.
3. Consult a Tax Professional: It’s a good idea to talk to a tax pro to make sure you’re getting all the deductions you can and staying compliant.

By following these steps, you’ll be on the right track and avoid any tax-related headaches.

Cheers!

(Source: Conversation with Gemini AI)

Currently, I use my PNB Jan Dhan Yojana savings account for all business transactions. Will I need to switch to a current account if I don't maintain the required minimum balance, or can I continue using my savings account?
Additionally, I also have a normal savings account with SBI

 

[TaxWiser]

Currently, I use my PNB Jan Dhan Yojana savings account for all business transactions. Will I need to switch to a current account if I don't maintain the required minimum balance, or can I continue using my savings account?
Additionally, I also have a normal savings account with SBI

● Using Your PNB Jan Dhan Yojana Savings Account

You can continue using your PNB Jan Dhan Yojana savings account for your business transactions. This account is designed to have no minimum balance requirement, which is a big plus for managing your funds without worrying about penalties. However, keep in mind that Jan Dhan accounts have certain limitations, such as a cap on the number of withdrawals per month.​

● Considering a Current Account

If your business grows and you find yourself needing more flexibility, you might want to consider switching to a current account. Current accounts are specifically designed for business transactions and typically offer unlimited transactions, higher transaction limits, and additional features like overdraft facilities. However, they usually require maintaining a minimum balance.​

​

● Your SBI Savings Account

You can also use your normal savings account with SBI for business transactions. Just be aware that savings accounts are generally meant for personal use, and frequent business transactions might attract scrutiny from the bank. Additionally, savings accounts might have limits on the number of free transactions per month.​

Ultimately, it depends on your business needs and transaction volume.

(Source: Conversation with Gemini AI)

 

[amitvicky]

If you earn 3% commission on recharge service then on 7.2 lakhs it will be around 21600/- per year.
I assume you have other means of earnings as well.
Or 7.2 lakhs is the commission/earning??

@TaxWiser
What should be his strategy specific to this scenario??

 

[TaxWiser]

If you earn 3% commission on recharge service then on 7.2 lakhs it will be around 21600/- per year.
I assume you have other means of earnings as well.
Or 7.2 lakhs is the commission/earning??

@TaxWiser
What should be his strategy specific to this scenario??

Same as mentioned before. Read the full post, it answers all necessary questions.

• Income Tax: You’ll be taxed on your net income (total receipts minus expenses). The tax rates depend on your total income.

 

[amitvicky]

Same as mentioned before. Read the full post, it answers all necessary questions.

Yeah... Usual human tendency
:-()